Bill Ford Points to Hybrids and Hydrogen as “Game-Changers”

25 January 2005

Introducing a briefing for financial analysts today in New York, Bill Ford, CEO of Ford Motor, outlined a product strategy that explicitly relies on hybrids and hydrogen as strategic differentiators—even in the short term. Presentation materials and an archived webcast of the briefing are available here.

One of the ways we plan to differentiate ourselves is to become a leader in offering innovation to make a difference for our customers, and the world in which they live. [...]

What we are really known for is being a company that successfully applies new technology to a mass market. We were the first to offer breakthrough innovations such as the V8 engine... to a mass audience. In recent years, our mass marketing breakthroughs...included everything from PZEV engines to Roll Stability Control.

The Escape Hybrid—the world’s first hybrid SUV—is a great example of successful product innovation for the mass market. The Escape Hybrid isn’t just a sensible solution that uses new technology. It is a hot item in the marketplace, and it is not just environmentalists who are raving about it.

Interestingly, a few years ago, we were under great pressure to cut that program because people said that for 20-30 thousand units, it’s not worth the trip. Frankly, that was the kind of thing that would have been cut in the past. We would not let that happen. We did not build our results by cutting our product programs.

So the Escape is sold out, and while it is great to be trendy and fashionable, it was also named North American Truck of the Year. I think that shows the significance of this product.

Hybrids do represent a way for us to differentiate ourselves, because for the first time in a long time, there are companies that have a significant new technology and there are companies that don’t. We have our own patented hybrid technology and proprietary drive system and electronic controls, and by the time many of our competitors offer a hybrid, we’ll be on to the next generation. Some [of the competition] won’t be able to afford their own proprietary system. [...]

That’s 5 hybrids. One very popular one on sale today, another coming later this year, and three more in the next 3 years.

But that’s only the start. It’s only one of four fuel technologies we are seriously working on.

We are the only auto company doing serious development work with all four fuel technologies: clean diesel, gasoline-electric hybrids, hydrogen-powered internal combustion engines and hydrogen fuel cells.

I believe that hydrogen internal combustion engines offer an interesting opportunity for us. We are going to have 100 of these vans on the road by next year for sale. This technology offers most of the benefits of fuel cells at a fraction of the price. It’s another way to separate Ford from the rest.

We are doing serious work for today and tomorrow. Our efforts include creating a path to a clean, renewable and hydrogen-powered future. This could be the next game changer in our business after hybrids, and if it is, I want us to have a leading position. We are doing our development in house with technical talent and a depth of capability that I match against anyone in the world.

It is not just about corporate citizenship...it is a way to differentiate ourselves, and a way to gain a competitive advantage.

For a discussion of Ford’s short-term hybrid plans, see this earlier post.

Ford’s 2005 Outlook came as it continues to lose market share to domestic and Asian rivals. The auto maker ended last year with a market share of 18.3%, its lowest in more than three decades. (Reuters) The company does expect to generate more revenue from its auto operations this year, although it expects overall earnings to drop.

Ford has begun formulating a market position around the “four fuel technologies” approach that I think could work for them, given that they continue to develop the products to back it up. But if the company wants to take ground back from Toyota, it will have to do more than be reactive. In other words, they need to try to lead the broader clean platform market, in the way that Toyota seized leadership of the hybrid market.

For that to happen, Ford will need to pick up the product and marketing pace. The Honda Insight came out in 1999, the Toyota Prius in 2000. Ford is 4–5 years behind in getting hybrids out in the market, and its competition in that space is moving on to their next-generation systems.

Ford could do it. The concepts rolled out at NAIAS seem very promising. But will it? Ford has to lead, not just with product, but with education and marketing to support those products. Ford needs to build the market, not just produce some cool prototypes that, if the correct conditions emerge, will be great products. Leading a market is different than producing a concept car. The founder of Ford managed to do both. Can the descendant?

Having seriously researched and having just now bought an Escape Hybrid, it seems that Ford's product design, initiative, and quality control are real and the word on this should spread quickly. The lack of available inventory resulting in fewer vehicles out and around would seem to impact their popularity as much as the level of marketing. Overall, well-designed and a real good value.

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